An important boost for companies to promote decarbonization initiatives and achieve the country’s emission reduction targets is the carbon market, which in Brazil is not yet regulated.

For Maria Izabel Ramos, Carbon Market Manager at Petrobras, it is crucial to speed up the regulation of the carbon market by the parliament, with a bill currently being discussed in the Senate. “There is a small parliamentary window, due to the 2024 municipal elections, for the bill to be voted on in the Senate,” she said during the panel “Risks and Opportunities of the Regulated Carbon Market in Brazil”, on Tuesday (28) at ESG Energia & Negócios, organized by the Brazilian Institute of Oil and Gas (IBP).

Tamara Fain, partner at Catavento Consultoria, points out that countries with clear and defined legislation already generate around US$ 75 billion annually from their emissions trading systems, which are managed by regulatory bodies and company transactions. It is even more urgent for Brazil to regulate this market, according to Fain, since the European Union plans to tax products from other countries based on the parameters of its carbon market, which will affect the cost of Brazilian goods and services.

Marina Westrupp Alacon Rayis, Sustainability Coordinator at Grupo Ultra, and Jeronimo Roveda, Director of Aliança Brasil NBS, agree that the lack of regulation creates legal uncertainty. They argue that passing on carbon costs to the end consumer, using a similar method to Uruguay, should not be implemented in Brazil.

Insurance and climate change
The insurance market is changing to meet the new demands and needs of the ESG agenda. This scenario was shown in the morning panel on the second day of ESG Energy and Business.

The Undersecretary for Long-Term Planning at the Ministry of Planning and the protection of assets. “Knowing the scenario we are facing and how we will repair the country, states and companies is vital and a joint work.”

Fernando Prado, CCO of Galcorr Seguros, emphasized that insurance pricing and the need to address the ESG agenda are changing due to climate events. Prado pointed out that many insurers refuse to serve companies that don’t adopt ESG practices. “Today, ESG is no longer an add-on in market operations. If you don’t have an ESG agenda, you won’t be insured”.

Mature Fields and ESG
Production in mature fields remains strategic for the Brazilian oil and gas sector and plays an important role in regional development. According to Telmo Ghiorzi, executive president of Abespetro, one of the industry’s major challenges is to make these assets productive. “We have 600,000 direct and indirect jobs in the production chain as a whole. Those are strongly affected by mature and strategic fields for suppliers,” he said during the panel on revitalizing mature fields.

Petrobras showed that the Campos Basin is still a very valuable asset in its portfolio and that it expects investments of US$ 22 billion and 135 new wells, according to its Strategic Plan. The company’s General Manager for Deepwater Project Design, Denis Krambeck Dinelli, confirmed the strategy. “In the last 3.5 years, we have put 47 new wells into operation in the Campos Basin. We will produce around 200,000 barrels/day by 2023.”

The president of IBP, Roberto Ardenghy, highlighted, at the closing session of the event, the generation of knowledge during the debates and the challenges and responsibilities the sector faces on its ESG journey – on topics such as carbon markets, emissions mitigation and fair and inclusive energy transition.

The 2nd Edition of ESG Energy and Business reinforced the success of the last edition, with more than 900 participants from 14 Brazilian states during the two days of debates. The event brought together a mostly female audience, accounting for 61% of the total, and participants largely in the 31 to 50 age group, with around 60% of these professionals holding management positions in the industry. Overall, there were more than 30 hours of content, with full rooms and audience engagement in the debates.

Organized by the Brazilian Oil and Gas Institute (IBP), ESG Energy and Business is sponsored by Petrobras, Equinor, ExxonMobil, Ipiranga, RepsolSinopec, Shell, Transpetro, Karoon Energy, Naturgy, OceanPact, Ocyan, SLB One Subsea, Shape and Subsea7.

IBP president Roberto Ardenghy stressed that the “energy transition has to be balanced so as not to generate a scenario of energy poverty”. “It’s a process that must be fair and balanced so that we don’t exclude thousands of people, not just in Brazil, but in several countries. It’s not enough to import solutions that work in other countries.” The executive also highlighted industry actions in the field of new technologies to decarbonize its processes and that the ESG agenda is incorporated into the companies in the sector.

Floriano Pessaro, Director of Corporate Management at Apex Brasil, stressed that Brazil’s trade promotion and investment attraction policy considers the “diversity of energy sources” and encourages decarbonization initiatives through the use of innovation and technology, such as those in the oil and gas sector – which is developing carbon storage and capture projects, for example.

“Another important driver is the promotion of opportunities in the North and Northeast regions in line with the need for regional development and energy alternatives in these locations.” One of the alternatives in these regions is the exploration of oil and gas reserves in the Equatorial Margin.

The Secretary of State for the Environment and Sustainable Development of Goiás, Andréa Vulcanis, believes that the fair energy transition also depends on advances in environmental regulation to obtain faster licenses for sustainable development. “Over the last five years, we’ve worked together with the productive sectors and society to advance the regulations and, as a result, the deadline for some licenses has dropped from 7 years to 50 days.”

G20 and ESG
The Deputy Sub-Secretary for International Relations of the State of Rio de Janeiro, Bruno de Queiroz Costa, stressed that the G-20 summit and the preparatory meetings for the event of the leaders of the 20 main economies are an opportunity to highlight the ESG agenda. Brazil, as host, has chosen topics such as fighting climate change and poverty, as well as remodeling global governance, as priority subjects for the debates. “This opens up space to debate the energy transition and the need to reduce emissions, combined with social inclusion.”

Fair energy transition and emission reduction
Still on the subject of energy poverty, Raquel Coutinho, Decarbonization Manager for Petrobras’ Portfolio, Value Chain and Products, said, in the panel “The future of oil production and refining in Brazil and the concept of equity in the fair energy transition”, that the change must “bring, in addition to energy, the possibility for society to access this energy.”

Alexandre Szklo, a professor at COPPE/UFRJ, presented a study on the topic that shows ways to reduce emissions. “The productive sector has the potential to decarbonize even more and become a major absorber of greenhouse gases. In the study we showed Brazil’s potential to produce bioenergy in degraded areas,” said Szklo.

Ana Cupelo, sustainability leader at Equinor, stressed that the energy transition must be planned, with the need to invest in oil and gas projects, focusing on efficiency and expanding renewable energy projects. “We work on important pillars, such as absolute emissions reduction, renewable energy projects, as well as working with education and forest conservation,” she said.

Yuri Orse, director of the Renewables Chain at Acelen Renováveis, highlighted the opportunities for decarbonization in biofuels, which can generate jobs. “We believe in solutions such as green diesel and SAF (sustainable aviation fuel). We have projects recovering degraded land with family farmers, which, in addition to generating energy, lead to economic development and employment. We have 90,000 direct and indirect jobs generated by these projects,” he said.

According to Fernanda Britto, ESG & Climate Change Partner at ERM, the central actor in a fair transition must be the people. “Fair transition means putting people at the center of decisions. The model we work on also works by thinking about new businesses and the risks embedded in them. Measuring how the risks materialize for society.”

ESG Energy and Business runs until tomorrow, Tuesday, and is sponsored by Petrobras, Equinor, ExxonMobil, Ipiranga, RepsolSinopec, Shell, Transpetro, Karoon Energy, Naturgy, Ocean Pact, Ocyan, SLB One Subsea, Shape and Subsea7.